Student loans are a fact of life anymore for many of us that attend college. And, with the rise of the need for college loans comes an increased rate of default on those loans. Unfortunately, if educational loans are the lion's share of your financial problems, bankruptcy may not be the solution. Many student loans are not dischargeable under either Chapter 13, or the Wage Earner Plan, or Chapter 7, or Straight Bankruptcy. Other methods of dealing with this debt are available and may be a better solution than filing for bankruptcy. Everett bankruptcy lawyers can offer advice on methods for avoiding bankruptcy if student loans are the majority of your debt.
First, don't simply give up and go into default on these loans. Collection fees and interest will accrue on the balance and make things worse. Your tax refunds can be diverted and applied to the balance and your wages can be garnished - neither of much help if penalties and interest are mounting up at the same time. Deferment is a viable option for your predicament, provided you are not in default on the loan, are in the grace period after graduation or have been granted previous deferments that keep you from being in default.
A "deferment" is a delay in payment based on certain conditions. Often, you may defer both principle and interest on the loan, which means the interest on your account will not be accruing and your balance will not increase. In other cases, you may only defer the principle, meaning that the interest continues to accrue and your balance will increase during this time. Determination of which condition can apply to you depends on the type of loan you have and when you got it.
You can qualify for deferment only if you meet certain conditions:
Total, temporary disability - If you obtained your loan before July 1, 1993 and you, your spouse or other dependent is temporarily totally disabled, you can defer payments for up to 3 years on most loans. If you are the one disabled, you must be unable to work or attend school for at least 60 days. If your spouse or dependant is disabled, their disability must make you unable to work or attend school because they need your care for at least 3 months.
Enrollment in rehabilitation for disability - You can defer payments on loans for six months after your training ends if you are enrolled in one of these programs.
Economic hardship - If you're suffering economic hardship for whatever reason, you can defer payments on loans obtained after June 30, 1993 for up to three years. Perkins loans can be from any time period. (A Perkins loan is a low interest (5%) loan for undergraduate and graduate students with "exceptional" financial need underwritten by the Federal government). If you receive welfare or SSI (Supplement Security Income from the Social Security Administration), or other public assistance, you are automatically entitled to a deferment. For those not receiving public assistance, your eligibility is calculated using the federal poverty level, the federal minimum wage, your loan payment amount and your income, for which you will have to provide documentation. Everett bankruptcy lawyers can provide information and guidance to determining economic hardship.
Re-enrollment in school - If you return to school at least half time, you are eligible for a deferment.
Unemployment - If you are unemployed and actively seeking work, you are eligible for a deferment. You will have to provide proof of your eligibility for unemployment benefits or evidence you are attempting to find a full time job (at least 30 hours per week) that will last at least 3 months.
Uniformed Service - Those currently serving in a uniform wearing branch of the government are eligible for a deferment under several situations. Contact your supervisor or commanding officer for more information.
Teaching in Needy Populations - Former students who now serve as teachers in needy areas, such as low income or disabled students, are eligible for deferment.
Community Service - performing community services, such as serving in the Peace Corps or teaching under and in certain conditions may entitle you to defer or even partially cancel your student loans.
Working in the heath care field - Nurses, doctors working on their residencies and other health care professions can often defer or cancel their loan payments.
To obtain a deferment, contact your lender, tell them which deferment you think you qualify for and ask for the proper paperwork. Fill these forms out very carefully, providing evidence of all requested information. Follow up on your request to make sure the process goes smoothly. Although this sounds like a lot of work, deferments can buy you the time you need to rectify your situation without the difficulty of attempting to discharge these debts under a bankruptcy. Everett bankruptcy lawyers can provide you with more information in applying for a deferment or direct you to information sites on the Internet.
When faced with overwhelming debt and the possibility of bankruptcy, Everett bankruptcy lawyers can help get your financial situation back under control.